How to Determine Daily Forex Trends using 50 200 EMAs
Many traders still struggle to determine the daily forex trends and this has compelled us to create this video on…
How to Determine Daily Forex Trends Using 50 200 Day Exponential Moving Average!
Firstly, to know what’s the Daily Forex Trend, you will need to use the Daily Time Frame on your selected Forex Pair. In this example, we will be looking at EURUSD. You don’t need any complicated indicators except 2 popular and common indicators in the 50 day Exponential Moving Average and 200 day Exponential Moving Average.
To determine the Daily Forex Trend, you just have to observer the 200 day EMA. If price is below the 200 EMA, then it’s a downtrend. If price is above the 200 EMA, then it’s an uptrend. It’s simple as that… and if you can just stick to this simple rule, you will almost be trading with the trend almost all the time.
In a downtrend, when the price is between the 50 EMA and 200 EMA, this is the sell zone. You just need a trigger to make your entry into a nice short position for a low risk trade. Similarly, in an Uptrend, when the price pullback in between the 50 EMA and 200 EMA, then this is a Buy Zone in the up trend. You will need a trigger to get into position.
- In an Uptrend:
Price is Above the 200 EMA
Only Consider Long Positions
Buy Zone is when price enters in between 50 EMA and 200 EMA
- In a DownTrend
Price is below the 200 EMA
Consider ONLY Short Positions
Sell Zone is when price enters in between 50 EMA and 200 EMA
This is a simple way to determining uptrend and downtrend. If you just consistently use these rules, you will soon find that you are trading with the trend most of the time. It will take some discipline but this is highly effective especially if you are starting out as a manual trader.
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